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​Homeowners considering installing renewable energy systems in their property are being urged to install them before April 2016.

From April 2016, the current 5% VAT (Value Added Tax) on the cost of renewable energy systems will increase to 20%. The British Government introduced the 5% VAT rate to encourage homeowners to make their homes more energy efficient.

The UK Government is bringing the VAT rate back in line with other goods because of an European Court of Justice (ECJ) ruling. The ECJ ruling stated that the UK VAT incentive on renewables did not meet the EU VAT Directive. However, the UK Government appealed saying that improving the energy efficiency of homes 'saves emissions and boosts energy efficiency'.

The ECJ passed its ruling on the reduced VAT in June 2015 on all homes except for social housing.

​"This judgment will have an adverse effect on the pockets of UK consumers and could hurt companies like ours which promote uptake of renewable technologies."

​He continued:

​"What makes this doubly bonkers is the fact that the UK has legally binding carbon reduction targets to hit and will face heavy penalties if they are missed. This latest ruling could make that all the more likely.

"The government has introduced a range of measures to help us hit these carbon targets, including the domestic Renewable Heat Incentive scheme, which offers financial incentives to people making the switch from fossil fuels, and the 5% VAT rate, and it is this tax break which is now disappearing.

"The future of domestic RHI is also far from certain, with news expected in the government's Autumn spending review on whether this incentive will be extended, replaced with an alternative scheme, or nothing at all.

"The sooner people thinking of switching to renewables actually make the change, the more money they will be likely to save. The effect of paying 15% more VAT on a biomass boiler or heat pump could run into thousands of pounds depending on the size of system.”